Additional Global IT

Sue58 wrote: »

I currently hold SMT & Witan and I am looking at adding another Global IT to the portfolio (Bankers or maybe Brunner?). This is so that I can increase my holdings in some oil companies such as BP and Royal Dutch Shell, as well as hold some other companies that the SMT and Witan don't hold/cover.

So the question is should I just continue with SMT and Witan or is it plausible to hold another Global IT for the reasons mentioned above? Any comments/views that I can consider would be appreciated. Thanks.

For most people a blend of SMT and WTAN would be enough, however, if you feel that BNKR offers you some extra/different holdings such as BP & RDSA then that is fine as well. It's all just personal preference and there's nothing wrong with doing all your research before making a final decision.

I'm no expert, but I've just looked at both these ITs on Morningstar Xray and they both only hold between 1% and 2.5% of their portfolios in BP or Royal Dutch Shell, so it is really worth it buying another IT just to get that amount of exposure to these companies and a few others like them that they hold?

I would revisit your plan to hold more of these fossil fuel companies that have a very poor future due to the forthcoming electric car revolution which will drop oil consumption by about 30% by the mid 2020’s. There are even recent S&P ETF’s that specifically exclude fossil fuel companies, worrying they will be left with stranded assets in the very high multi billions.

But if you wanted to hold them, why buy ITs, for which you are paying a premium for their expertise, buy the shares.

Edit ; hot off the press, the Dutch (home of Shell !! ) , plan to ban sales of conventional cars in just 12 years time.
https://electrek.co/2017/10/10/netherlands-dutch-ban-petrol-diesel-cars-2030-electric-cars/

AnotherJoe wrote: »

I would revisit your plan to hold more of these fossil fuel companies that have a very poor future due to the forthcoming electric car revolution which will drop oil consumption by about 30% by the mid 2020’s. There are even recent S&P ETF’s that specifically exclude fossil fuel companies, worrying they will be left with stranded assets in the very high multi billions.

Presumably, the Managers of IT's such as Bankers and Brunner and OEIC Funds such as Liontrust Special Situations, Royal London Equity Income, Trojan etc who all hold oil companies like Royal Dutch Shell & BP are aware of this but still continue to have them in their top 10 holdings?

ArchBair wrote: »

Presumably, the Managers of IT's such as Bankers and Brunner and OEIC Funds such as Liontrust Special Situations, Royal London Equity Income, Trojan etc who all hold oil companies like Royal Dutch Shell & BP are aware of this but still continue to have them in their top 10 holdings?

They probably don’t agree with that forecast or those are income funds and the income is hard to turn down? Just like OPEC think electric cars will be 10% of the market by 2050 when it will most likely be game over for gasoline engines ten years previously at least.

There are plenty of examples of so called experts who fail to see the revolutionary new technologies that destroyed their businesses. Kodak, Nokia being two recent examples. The smart people at Arthur Andersen (IIRC) advised AT&T in the mid 1980s not to invest in mobile technology as they thought the total market by 2000 would be 900,000 users. It was 109 million. And now I think it’s uo to a billion, anyway by the late 90s it was as too late for AT&T to get into it.

Or in this industry look at the German company RWE who a few years back invested €10Bn which was lost a year later when the project started they invested in were derailed by new wind power and solar. They even instituted a root and branch analysis to see why they made those poor investments, essentially, they were too blinkered about business as usual to look outside and see the rapid advances being made.

And whose the big expert in funds who recently screwed up and didn’t see the Prudentual fiasco coming and was buying their shares like it was a going out if fashion ? Forget his name.

Finally, maybe Shell do get it they are starting to roll out electric charging stations at their petrol stations. Whether that will make a difference I doubt but who knows.